Economic jitters have caused Americans of all income groups to reduce spending. Bankrate's "Financial Security Index" shows two out of five consumers slashed spending in the past 60 days.
That's not too surprising, given the recent string of bad disappointing economic news. "The hub on the wheel is job growth," says Greg McBride, senior financial analyst at Bankrate.com. "The lack of job growth weighs on everyone's confidence level, even those who are working," he says.
What was surprising, says McBride: Spending reductions were apparent across all income groups -- even high-income households. In fact, 37% of households earning $75,000 or more admitted to cutting back.
"One of the contrasts we've seen throughout the year is that higher-income households have actually been bucking the trend," McBride says. "They've very consistently voiced a feeling of improving financial security throughout 2011 -- so to see a cutback in spending even encompass the higher income level ratchets up the level of economic concern," he says.
While Bankrate's survey didn't examine specific spending categories, McBride bets most of the cuts have been in discretionary categories like eating out, travel and entertainment. "When things are tight or when people are nervous, discretionary spending is the first to go," he says.
Looks like McBride is on the right track. In a separate survey, the American Express Spending & Saving Tracker found that about 31% of Americans plan to spend less in the upcoming months -- and stay-at-home dining and entertainment occupied two of the three top spots:
- Eating at home vs. dining out (81%)
- Making better use of the clothes in their closet (55%)
- Watching movies at home instead of in a theater (46%)
- Purchasing less expensive beauty products (42%)
- Waiting longer between salon / barber visits (37%)
Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter/farnoosh.
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